Yit Oyj · OMXHEX:YIT
Yit Oyj — Investor Presentation (November 2017)
38 slides from Yit Oyj's investor presentation, November 2017
Slide 1: Analyst Christmas Lunch - Going forward
Analyst Christmas Lunch - Going forward Kauniskangas / Neuvonen November 2017
Slide 2: Contents
Contents 1. Market update 2. Large projects 3. Partnership Properties 4. Financing update YIT | 2
Slide 3: Market update
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Slide 4: Development of macro environment
Market dynamics Development of macro environment 2017: 3.0% 2017: 2.8% FINLAND 2017: 1.9% 2018: 2.5% 2018: 2.0% RUSSIA 2018: 2.0% 2019: 2.2% 2019: 1.3% • Acceleration in demand boosts 2019: 2.0% exports, investments increasing • Economy recovering, gradually rapidly, recovery broad-based 2017: 2.2%
Slide 5: High construction volumes compensating quiet years in the past
Market update: Finland High construction volumes compensating quiet years in the past Change in YIT’s sales mix in Finland (pcs) • Sales are proceeding well, clear change in mix from investors to consumers at YIT 3,502 3,192 3,040 2,779 • Good development in growth areas in 2,765 2,757 2,730 2,432 2
Slide 6: Urbanisation is supporting growth
Urbanisation is supporting growth • Population growth continues in growth centres despite the overall slowing trend in Finnish population growth Population development in HMA Population development forecast until 2040 in HMA 1,400,000 1,400,000 1,300,000 1,300,000 1,200,000 1,200,000 20% growth 1,10
Slide 7: Sales and start-ups in Finland in Q3
Housing Finland and CEE Sales and start-ups in Finland in Q3 Sold apartments (units) • Consumer sales increased 2016: 2,730 1-9/2017: 2,182 by 63% • Share of units sold to 858 826 789 consumers record-high: 705 612 555 240 567 84% (Q3/2016: 52%) 317 328 332 92 298 264 618 509 461 475 • 64 apartments
Slide 8: CEE's economic outlook
CEE’s economic outlook Consumer confidence has developed favourably Household consumption on a solid uptrend 10 130.0 5 125.0 0 120.0 -5 115.0 -10 110.0 -15 105.0 -20 100.0 -25 95.0 -30 90.0 -35 85.0 Index 2010=100 -40 80.0 2013 2014 2015 2016 2017 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 E
Slide 9: Residential market in the CEE countries
Market update: CEE countries Residential market in the CEE countries Residential start-ups in the Czech Republic Residential start-ups in Slovakia (units) Residential start-ups in Poland (units) (units) 180,000 168,400 173,900 172,000 148,100 32,200 30,600 21,400 127,400 27,200 19,600 20,000 83,600
Slide 10: Residential market in the Baltic countries
Market update: CEE countries Residential market in the Baltic countries Residential start-ups in the Estonia (units) Residential start-ups in Latvia (units) Residential start-ups in Lithuania (units) 5,600 12,703 4,732 4,900 11,300 1,500 10,177 10,200 3,969 1,400 1,511 7,524 7,624 5,700 2,756 1,270
Slide 11: Financials update on housing in CEE
Operations in the CEE countries Financials update on housing in CEE Revenue, EUR million, the CEE countries’ share of the segment’s revenue, % • The revenue during 1– 140 9/2017 has already 111 116 exceeded full year 2016 120 106 100 80 80 72 • EBIT-% above the Housing 60 47 Finland and CEE segment’
Slide 12: Examples of YIT's projects under construction in the CEE countries
Examples of YIT’s projects under construction in the CEE countries Estonia Poland Slovakia Czech Republic Mäepealse: 600 flats Nordic Mokotow: 300 flats Stein2: 450 flats Suomi Hloubetin: 1,000 flats Estonia Czech Republic Czech Republic Latvia Vibu: 500 flats Nuppu: 1,000 flats Aalto Cibulka: 250 f
Slide 13: Finnish brand highly valued in the CEE countries
Finnish brand Suomi-alue Tsekissä – voidaanko highly valued in the kertoa? CEE countries •• Suomen vahva brändi CEE- Suomi Hloubetin area maissa developmenton tärkeä project in the kilpailuetu Czech Republic named after Finnish towns • In total 900 apartments to be completed by 2023 YIT | 13
Slide 14: Sales and start-ups in Q3 (Housing Russia)
Housing Russia Sales and start-ups in Q3 Sold apartments (units) and share of sales financed with a mortgage (%) • Number of sold units 2016: 3,523 (51%) 1-9/2017: 1,942 (52%) decreased by 8% y-o-y 892 880 925 • No changes in price lists 826 812 584 • Sales increased by 39% 546 from Q2, growth espec
Slide 15: Large projects
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Slide 16: Large projects in order backlog
Market update: Business Premises and Infrastructure Large projects in order backlog Estimated completions of 5 largest Jun-17 self-developed Dec-17 business premises Jul-18 Feb-19 projects and 5 largest Aug-19 business premises Mar-20 Sep-20and infrastructure Apr-21 contracts Oct-21 Tripla hotel ~90
Slide 17: Fortum headquarters – A development project by Regenero
Fortum headquarters – A development project by Regenero • Entity comprising the Fortum’s heaquarters: the high-rise building, the Keilalampi office building and unused residential building rights • YIT has the right to purchase the new residential construction rights from Regenero • Target to develo
Slide 18: Hippos2020
Hippos2020 Targeted number of visitors when Total floor space of buildings completed • A hybrid project with various recreation facilities 3–5 million 122,000 in Jyväskylä, Finland per annum sq.m • Keva and OP in a consortium, chosen to innovation development phase • The final decision regarding the
Slide 19: Helsinki High Rise
Helsinki High Rise • YIT’s proposal was chosen for the second phase of international High Rise design-build competition • Design area covers 150,000–200,000 square metres of residential, office and commercial premises • The winner and approval of the implementation will be decided in autumn 2018 • W
Slide 20: Partnership Properties
3 Partnership Properties YIT | 20
Slide 21: More out of urban development
Partnership Properties More out of urban development KEY ACTIONS Step C • Residential services Step B • Renovation services • Partnership Properties segment Growing Step A • Improved risk tolerance operating • Group Urban • More professional More profit stable development resources cash unit More fl
Slide 22: Targets of the new business area
Targets of the new business area Improve visibility on Improve group’s Create portfolio of 1 growth capability 2 true value of existing assets 3 stable cash flows Sufficient information Participation in sizeable of assets Diversified real-estate urban developments and urban area portfolio Clarified
Slide 23: Own-based vs. tender-based business model
Own-based vs. tender-based business model Own-based business Tender-based business margin Risks margin Risks Partnership Number and Properties Schedule activity of Costs effect competitors Intensity of Demand competition Sales price level Employer’s Interest level behaviour capital tied volume • Thr
Slide 24: Value creation process
Value creation process Capabilities and Outcome Results resources Tripla Urban city Fortum Area Hippos development developments Siltamäki Hakunila Area development Concrete 70–80% projects of own based projects Specialised own based development Building 500,000–600,000 Plot factory right sqm of annu
Slide 25: Balanced risk profile and operating model
Market dynamics Balanced risk profile and operating model higher margin more capital tied • Balanced risk profile boosted higher capital and OWN-BASED consumer risk Solutions BUSINESSfor with Partnership Properties urban living offers opportunities to vary e.g. affordable apartments between: • diffe
Slide 26: Business model offering new earnings potential
Business model offering new earnings potential Different sources of earnings Sales of Cash flow / Turn key developed market based Steady cash flow contract Optimal timing of projects to a valuation of the through fund Recognition 100% disposal asset after ownership when finished completion Market va
Slide 27: Examples of created projects in different asset classes
Examples of created projects in different asset classes Mall of Tripla E18 Hamina-Vaalimaa Highway Tietotie renovation • Value: EUR ~600 million • PPP-project with Meridiam • Detail design ongoing • Unique concept • EUR 220 million investment • Long-term contract under negotiation • Unique location
Slide 28: YIT's role extended from development to establishment
Partnership properties YIT’s role extended from development to establishment Current model New model 1000 • ~1–3 years Establishment • 1000 Value creation Establishment holding period potential period • 900 Uncertainties in 900 unlocked the length of through 800 development optimizing 800 period Exe
Slide 29: Roles of the new segment
Partnership properties Roles of the new segment Segment involved only in large and/or long-term development projects financed with partners Key roles ➢ Investment case preparation ➢ Legal structuring ➢ Funding ➢ Asset valuation (external valuation to create transparency) ➢ Care on assets during the
Slide 30: ROE vs. cash flow in different models in own-based business
Market dynamics ROE vs. cash flow in different models in own-based business YIT alone Joint-venture • High capital employed • Lower capital employed Development only • High EBIT • Lower EBIT • High risk • Shared risk • Lower capital employed Long-term cash-flow generating • Lower EBIT Not possible i
Slide 31: Financing update
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Slide 32: Financial key ratios in Q3
Financial position Financial key ratios in Q3 • Gearing and equity ratio impacted by temporarily increased net debt • Net debt/EBITDA (IFRS) continued to improve Gearing (%) Equity ratio (%) Net debt/EBITDA (Multiple, x) 12.3 12.3 10.3 118.9 124.0 112.3 115.0 36.4 8.6 108.6 104.8 35.1 35.4 34.6 8.1
Slide 33: Residential construction stage financing to meet market practice
Residential construction stage financing to meet market practice • Until now, YIT has sold the contract receivables from housing corporations fo financial institutions This model differs from market practice and doesn’t offer similar benefits than before Previously used financing model Current mod
Slide 34: Balanced debt portfolio
Financial position Balanced debt portfolio Debt portfolio at the end of the period 9/2017, EUR 701 million Maturity structure at the end of the period 9/2017 Maturity profile, excluding construction stage financing (EUR million) 500 Commercial papers 450 Bonds, 21% 400 Pension loans Commercial paper
Slide 35: Net debt and maturity structure in Q3
Financial position Net debt and maturity structure in Q3 • Net debt increased temporarily due to negative cash flow from operations • A new EUR 50 million, 3-year bilateral loan withdrawn after the review period in October Interest-bearing debt (EUR million), IFRS Maturity structure of long-term deb
Slide 36: Disclaimer
Disclaimer This presentation has been prepared by, and the information contained herein (unless otherwise indicated) has been provided by YIT Corporation (the “Company”). By attending the meeting or event where this presentation is made, or by reading the presentation slides, you agree to be bound b
Slide 37: Disclaimer - merger of YIT and Lemminkäinen
Disclaimer Important information regarding the merger of YIT and Lemminkäinen The information contained in this presentation regarding the merger of YIT Corporation (“YIT”) and Lemminkäinen Corporation (“Lemminkäinen”) (unless otherwise indicated) has been provided by YIT and Lemminkäinen. By attend
Slide 38: Together we can do it.
Together _ we can do it.